SF 2586

as introduced - 87th Legislature (2011 - 2012) Posted on 04/02/2012 09:00am

A bill for an act
relating to taxation; income and franchise; establishing a live theater production
partnership credit; appropriating money; proposing coding for new law in
Minnesota Statutes, chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290.0682] LIVE THEATER PRODUCTION PARTNERSHIP CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Credit allowed. new text end

new text begin Subject to the conditions set forth in this section,
an individual or a corporate taxpayer is allowed a credit against the tax due under this
chapter, for each taxable year in which the applicant is issued an accredited theater
production certificate, equal to: 25 percent of the total qualifying labor expenditures and
production expenditures for a tier-one production, and 35 percent of the total qualifying
labor expenditures and production expenditures for a tier-two production.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) "Accredited theater production" means a tier-one or
tier-two production that is a for-profit live stage presentation in a qualified production
facility, as defined in this section.
new text end

new text begin (b) "Accredited theater production certificate" means a certificate issued by the
Department of Employment and Economic Development certifying that the production is
an accredited theater production that meets the guidelines of this section.
new text end

new text begin (c) "Applicant" means a taxpayer that is a theater producer, owner, licensee,
operator, or presenter that is presenting or has presented a live stage presentation located
in the state who:
new text end

new text begin (1) owns or licenses the theatrical rights of the stage presentation for the production
period, or has contracted or will contract directly with the owner or licensee of the
theatrical rights or a person acting on behalf of the owner or licensee to provide live
performances of the production; and
new text end

new text begin (2) has entered into an agreement with a sponsor organization for the purposes of
producing the accredited theater production.
new text end

new text begin (d) "Labor expenditure" means gross salary or wages, including, but not limited to,
taxes, benefits, and any other consideration incurred or paid to nontalent employees of
the applicant for services rendered to and on behalf of the accredited theater production.
The expenditure must be:
new text end

new text begin (1) incurred or paid by the applicant on or after the effective date of this section for
services related to any portion of an accredited theater production from its preproduction
stages, including, but not limited to, the writing of the script, casting, hiring of service
providers, purchases from vendors, marketing, advertising, public relations, load in,
rehearsals, performances, other accredited theater production-related activities, and
load out;
new text end

new text begin (2) paid to Minnesota residents in the taxable year for which the applicant is
claiming the tax credit award, or no later than 60 days after the end of the taxable year; and
new text end

new text begin (3) limited to the first $100,000 of wages incurred or paid to each employee of an
accredited theater production in a taxable year.
new text end

new text begin (e) "Long-run production" means a live stage production that is performed in a
qualified production facility for longer than eight weeks, with at least six performances
per week.
new text end

new text begin (f) "New or expanding" means a live theater production company that, on December
31 of the year in which the applicant taxpayer files for surrender of its accredited theater
production certificate and on the date of issuance of the accredited theater production
certificate, has fewer than five employees in the state.
new text end

new text begin (g) "Pre-Broadway production" means a live stage production that, in its original
or adaptive version, is performed in a qualified production facility having a presentation
scheduled for Broadway's Theater District in New York City not longer than 12 months
after the date of its last Minnesota presentation.
new text end

new text begin (h) "Production spending" means any and all expenses directly or indirectly incurred
relating to an accredited theater production presented in any qualified production facility
of the applicant, including, but not limited to, expenditures for:
new text end

new text begin (1) national marketing; public relations; and the creation and placement of print,
electronic, television, billboard, and other forms of advertising; and
new text end

new text begin (2) the construction and fabrication of scenic materials and elements, provided that
the maximum amount of expenditures attributable to the construction and fabrication of
scenic materials and elements eligible for a tax credit award shall not exceed $500,000 per
applicant per production in any taxable year.
new text end

new text begin (i) "Qualified production facility" means a facility located in the state in which
live theatrical productions are, or are intended to be, exclusively presented that contains
at least one stage, dressing rooms, storage areas, and other ancillary amenities necessary
for the accredited theater production, and:
new text end

new text begin (1) for a tier-one production, a seating capacity of 700 or more; and
new text end

new text begin (2) for a tier-two production, a seating capacity of between 200 and 699.
new text end

new text begin (j) "Sponsor" means a Minnesota organization that:
new text end

new text begin (1) is in the business of producing live stage presentations;
new text end

new text begin (2) has its headquarters within 50 miles of the theater where the accredited theater
production is performed; and
new text end

new text begin (3) has nonprofit, tax-exempt status under section 501(c)(3) of the Internal Revenue
Code.
new text end

new text begin (k) "Tier-one production" means a pre-Broadway production or a long-run
production performed in a qualified production facility for which aggregate expenditures,
including labor, equal at least $100,000.
new text end

new text begin (l) "Tier-two production" means a live stage production performed in a qualified
production facility for more than six weeks but less than 36 weeks, with at least five
performances per week for which aggregate expenditures, including labor, equal at least
$50,000.
new text end

new text begin Subd. 3. new text end

new text begin Application for accredited theater production certificate; certification
of credits. new text end

new text begin (a) An applicant must apply to the Department of Employment and Economic
Development for an accredited theater production certificate for each accredited theater
production at each of the applicant's qualified production facilities. The application must
be in the form and in a manner approved by the Department of Employment and Economic
Development and the commissioner of revenue. The Department of Employment and
Economic Development shall issue an accredited theater production certificate to an
applicant if it finds that:
new text end

new text begin (1) the applicant intends to make the expenditures in the state required for
certification of the accredited theater production;
new text end

new text begin (2) the applicant's accredited theater production will benefit the people of the state
by increasing opportunities for employment of state residents;
new text end

new text begin (3) the relationship with the sponsor will utilize the sponsor's resources to the benefit
of the accredited theater production; and
new text end

new text begin (4) if not for the tax credit award, the applicant's accredited theater production
would not occur in the state, which may be demonstrated by any means, including, but not
limited to, evidence that:
new text end

new text begin (i) the applicant, presenter, owner, or licensee of the production rights has other state
or international location options at which to present the production and could reasonably
and efficiently locate outside of the state;
new text end

new text begin (ii) at least one other state or nation could be considered for the production;
new text end

new text begin (iii) the receipt of the tax award credit is a major factor in the decision of the
applicant, presenter, production owner, or licensee as to where the production will be
presented and that without the tax credit award the applicant likely would not create or
retain jobs in the state; or receipt of the tax credit award is essential to the applicant's
decision to create or retain new jobs in the state; and
new text end

new text begin (iv) the tax credit award will result in an overall positive impact to the state, as
determined by the department using the best available data.
new text end

new text begin (b) The commissioner shall act expeditiously regarding approval of applications for
accredited theater production certificates so as to accommodate the preproduction work,
booking, commencement of ticket sales, determination of performance dates, load in, and
other matters relating to the live theater productions for which approval is sought.
new text end

new text begin (c) Upon satisfactory review of each application, the Department of Employment
and Economic Development shall issue a tax credit award certificate stating the amount
of the applicant's tax credit award for the taxable year. By January 31 of each year, the
Department of Employment and Economic Development must report to the commissioner
of revenue the number, amount, and taxpayers to whom tax credit award certificates
were issued during the preceding taxable year, and must provide verification that the
applicants issued accredited theater production certificates made the full amount of labor
expenditures and production expenditures for which the certificates were issued.
new text end

new text begin (d) The amount of tax credits awarded to all applicants under this section shall not
exceed $2,000,000 in any calendar year. Applications shall be considered in the order
received.
new text end

new text begin Subd. 4. new text end

new text begin Carryover. new text end

new text begin The credit is limited to the liability for tax as computed under
this chapter for the taxable year. If the amount of the credit determined under this section
for any taxable year exceeds this limitation, the excess is a live theater production credit
carryover to each of the five succeeding taxable years. The entire amount of the unused
credit for the first taxable year is carried first to the earliest of the taxable years to which the
credit may be carried and then to each successive year to which the credit may be carried.
The amount of the unused credit which may be added under this subdivision shall not
exceed the taxpayer's liability for tax, less the credit under this section for the taxable year.
new text end

new text begin Subd. 5. new text end

new text begin Transfers. new text end

new text begin After 180 days from the date of an applicant's first labor
expenditure or production expenditure, the applicant may sell, assign, or otherwise
transfer all or part of the value of the credits to another taxpayer subject to tax under this
chapter and must notify the commissioner of revenue within 30 days of the transfer on
a form prescribed by the commissioner. An applicant may not transfer a credit more
than once in a 12-month period.
new text end

new text begin Subd. 6. new text end

new text begin Live theater tax credit award program required agreement; evaluation
and reports. new text end

new text begin (a) The commissioner shall require a recipient of a live theater production
tax credit award certificate to enter into a written agreement with the sponsor affiliated
with the accredited theater production concerning the terms of their relationship for
purposes of the live theater production.
new text end

new text begin (b) By March 30 of each calendar year, the Department of Employment and
Economic Development shall submit to the chairs and ranking minority members of the
senate and house of representatives committees having jurisdiction over jobs, economic
growth, and taxes, a report that includes:
new text end

new text begin (1) an assessment of the effectiveness of the program in creating and retaining
live theater production jobs in the state and whether the job positions are entry level,
management, vendor, or production related;
new text end

new text begin (2) the amount of accredited theater production spending brought to the state,
including the amount of spending and type of Minnesota vendors hired in connection with
an accredited theater production;
new text end

new text begin (3) demographic information on the recipients of qualifying Minnesota labor
expenditure salaries or wages, including geographical, racial and ethnic, gender, and
income level information; and
new text end

new text begin (4) the identification of each vendor that provided goods or services included in an
accredited theater production's Minnesota production spending.
new text end

new text begin (c) $....... is appropriated annually from the general fund to the Department of
Employment and Economic Development for the evaluation and reporting required under
this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2011.
new text end